SEOUL - In a sign that the South Korean government is turning to its old arm-twisting tactics to accelerate the restructuring of the country's major corporations, a top official said last week that the Samsung Group will exit the auto business.
Kang Bong-Kyun, an economic aide to South Korean President Kim Dae-Jung, told reporters in Korea that Samsung will swap its auto unit, Samsung Motors Inc., with the Daewoo Group in return for a unit widely speculated to be Daewoo Electronics.
That was news to Samsung and Daewoo.
'This is the first we've heard of it. I don't know what the government has in mind,' said a Samsung Motors spokesman.
A Daewoo spokesman also voiced surprise.
'We don't perceive any need to take over Samsung Motors at this time,' said Lee Jeung-Seung, Daewoo Group spokesman.
Nonetheless, the government is promoting the business swap idea as a way to force Korea's chaebol, or conglomerates, to focus on core competencies and make them more efficient.
Samsung is viewed widely as ripe for restructuring.
Samsung Motors' debts are estimated at four trillion won, or about $3.15 billion at current exchange rates. It opened a luxury-car plant just in time for car sales in Korea to tank for everything except the cheapest small cars.
Meanwhile, Hyundai Motor Co. formally cemented an agreement with Kia Motors Corp.'s creditors to take over the bankrupt Korean carmaker and its truckmaking affiliate, Asia Motors Corp.
Creditors acceded to Hyundai's demands for more debt write-offs.
As a result, the total debt write-off has been set at some $5.72 billion, an increase of about $157 million from the takeover's initial terms.
Hyundai must ante up about $925 million in cash by next March for the Kia and Asia shares.
The takeover will give Hyundai more than 60 percent of the domestic car market and a production capacity of 2.5 million units.